SENATE BILL REPORT

SB 6565

BYSenators Barr, Hansen, Newhouse and Rinehart

Creating a central filing system for agricultural liens.

Senate Committee on Agriculture

Senate Hearing Date(s):January 19, 1990

Senate Staff:Stephen Nelsen (786-7464)

AS OF JANUARY 18, 1990

BACKGROUND:

Federal law effective in 1986 preempted Washington State law regarding the discovery of security interests in farm crops.  Under current federal law, lenders with a secured interest in farm crops must either give buyers of those crops notice of the lender's interest or use a central filing system in a manner set forth in the federal law.

Federal law requires that any central filing system be authorized by the state.  The state has not yet authorized such a system.  Lenders assert the lack of a central filing system may threaten the availability of production credit for farmers.

SUMMARY:

The Uniform Commercial Code is amended to require the Department of Licensing to develop and implement a central filing system containing effective financing statements for farm crops and to provide that a buyer of farm products takes free of any security interest if the buyer has registered with the Department of Licensing, and the buyer has not received written notice that specifies the seller and farm product from the Department of Licensing, the secured party has not filed an effective financing statement with the Department of Licensing, or the seller has not provided the buyer with written notice of the interest as set forth in federal law.

The Uniform Commercial Code is further amended to prescribe the requirements for an effective financing statement, and to require the Department of Licensing to keep record of effective financing statements filed with the department.

The Department of Licensing is required to define the categories of farm products for central filing and set up a fee schedule for search requests in accordance with the rule-making provisions of the Administrative Procedure Act.

The Department of Licensing shall provide registrants with a quarterly list and bi-weekly cumulative supplements of debtors organized alphabetically according to farm product categories, and provide non-registrants confirmation of the filing of an effective financing statement.

Appropriation:  none

Revenue:   yes

Fiscal Note:    requested January 15